Joining after a debt arose does not remove every director-penalty question. Establish the appointment date, liabilities and actions taken, then obtain advice on the rules that apply to a new director.
Corporate Recovery Partners
01 / 06
The new director discovers the old balance
A mechanic joins the board of a family company believing its tax accounts are current. The bookkeeper later produces an overdue balance covering earlier periods. The new director assumes those amounts concern only the previous board. Before continuing unchanged, the appointment and debt records need prompt professional review.
Collect appointment documents, company records and the relevant tax statements. Identify each liability period and due date with the tax agent. Keep actual dates separate from recollections about when management responsibility informally changed.
Record when the issue became known and what steps followed. Do not backdate minutes or alter appointment records to create a more favourable account.
Section269-20 includes a specific penalty rule for a person becoming a director after the relevant due day. Ask the lawyer to apply the current provisions to the appointment, liabilities and company actions.
Avoid assuming resignation now or a promise from the former owner resolves exposure. The response requires advice on the actual statutory position, not simply an agreement about who caused the debt.
Request lodgment status, outstanding amounts, current cash and other creditor commitments. A single account balance may leave reporting gaps or additional liabilities unexplained. Ask the accountant to reconcile uncertain figures.
Explain any limits on access to records promptly. Being new to the company makes a structured information request especially important; it should not become a reason to postpone advice until every document is perfect.
Ask the legal and insolvency advisers what actions are available and required, and who will carry them out. If a notice has arrived, provide it immediately rather than treating the issue as ordinary bookkeeping.
Keep the ongoing tax process under review so new liabilities are not added while old ones are investigated. Record advice and decisions accurately, including questions that remain unresolved.
